By Daily Crux Editor Sean Goldsmith:

Whitney Tilson, who racked up great returns for his T2 Partners funds shorting financials, is now looking for values in the sector.

"Valuations have compressed so much we actually flipped around and went long some financials such as American Express (AXP) and Wells Fargo (WFC)," Tilson told CNBC.

Tilson says there's a 70% chance Wells Fargo will survive without "any kind of catastrophic outcome," in which case it's a $40-$60 stock - Wells Fargo currently trades around $15.

Tilson also believes most investors make a major mistake when evaluating financial companies… "People often look at what the losses will ultimately be and then compare it to today's balance sheet and make a decision." He points out that the losses come over many years, and as long as the company's earnings keep up with the losses, it will survive.

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